In recent years , more women have entered the banking and financial services industries than ever before. However , even now , these two fields remain overwhelmingly male bastions . I had always presumed that this was the result of an Old Boy network but a 2009 study by Paola Sapienza of Northwestern University seems to prove otherwise . Her research , published by the National Academy of Sciences , suggests that this situation is due not to sexism but to testosterone levels in individuals . These, she says , are tied to the individual’s appetite for risk and thus to success in the financial industry. It is an interesting theory …
Working with MBA students from the University of Chicago , Dr. Sapienza and her researchers measured testosterone levels in the saliva of their subjects . They also measured the ratios of the student’s index fingers to their ring fingers ; a higher ratio indicates increased levels of pre-natal exposure to testosterone . This latter correlation was used to determine the subjects’ emotions by observing only their eyes .
The students appetite for risk was investigated by having them make 15 risky choices. In each case , they were asked to choose between a 50: 50 chance of winning $ 200 OR a gradually increasing guaranteed payout , from $50 initially up to a maximum of $ 120.The point at which the student decided to go for the sure payout was considered a reasonable estimate of his (or her) appetite for risk.
The results showed that men and women with the same testosterone levels generally switched to the sure payout at the same time , thus indicating a similar propensity for risk.Also , women with more testosterone had a greater appetite for risk than those with a lower testosterone level. The same was generally true for the men though the correlation was not as pronounced for men with medium levels of testosterone.
The researchers also followed the subjects careers after they had graduated and found that those with higher levels of testosterone, irrespective of gender, were more likely to take careers in finance ; their personal investment portfolios were also more riskier .All of this seems to prove pretty definitely that it is the testosterone level and not gender that determines one’s appetite for risk and hence one’s chances for success in the area of high finance .
Far be it for me to discount a conclusion based on sound scientific experiments but I have my doubts about this conclusion. I have several relatives working in finance and the picture I get is that of very intelligent , hardworking ,hard-drinking driven young people who routinely work 60 and 70 hour weeks . Many of these youngsters are from élite ( read Ivy League) schools and they all know each other ; the old school ties count for a lot. Women are doubly handicapped when they try to break into these closed circles because a) they are unable to work these long hours indefinitely because of family responsibilities and b)they can’t drink with the boys and keep up with them. I remember an article in New York magazine two or three years ago which told of the travails of a female banker. Initially , she was frozen out of the inner circle at work but , once she went out drinking with the boys she gradually won their acceptance and ,subsequently , several promotions . At the time of writing , she been appointed a V.P and was doing very well financially ; she was also an admitted alcoholic.
So while I think there may be something to the connection between testosterone levels and success in the financial field , I think there is a simpler explanation to why finance is still a male dominated vocation.